Labour’s water tax policy holds a sting in its tail:
Farmers and horticulturalists face the prospect of resource consents if they want to make a shift in land use under a Labour government.
Buried in Labour’s water policy announcement was its intention to dump the National Policy Statement on Freshwater Management and replace it with a policy based on recommendations made by Environment Court judge David Sheppard in 2010.
Sheppard’s recommendation was any increase in farming intensity including more livestock, irrigation or fertiliser would no longer be permitted under the Resource Management Act unless a resource consent was obtained.
That suggestion was shelved by National when it instead opted for the policy statement on freshwater management now in play.
Federated Farmers water spokesman Chris Allen said he was surprised to learn about the resource consent provision in Labour’s policy, which had less profile than the water royalty charges mooted.
“But take that along with the water charges and they have just added another level of burden and cost on producing food in this country.
“It would seem the $18 cabbage will become more of a reality.”
He also challenged the costs the consent conditions would bring.
“This will require a significant increase in the number of people skilled to work in this area of consenting.
“Even here just in Canterbury right now we cannot get enough of those people, let alone throughout NZ.”
He said Labour’s water package taken in its entirety should have all New Zealanders concerned. . .
Water New Zealand has joined the critics of the policy:
. . . “It is only fair that some of the profits from the taking of water are returned to communities to help restore degraded water quality,” says Chief Executive John Pfahlert.
But it’s not fair that people who are already doing everything they can to protect and enhance waterways and in areas where there aren’t quality problems should pay for clean-ups elsewhere.
“In principle it acknowledges the value of water and its huge contribution to our economic security and way of life.”
He says he can understand why voters would be attracted to policies that include charging big commercial users such farmers who rely on irrigation and water bottling companies. But he believes a fairer approach would be to charge everybody who uses water.
“Why target farmers and water bottlers and not industrial and domestic users in order to ensure that water is used efficiently across all sectors?”
John Pfahlert says it is important that there is a consistent approach to any policy on water and water pricing and not a knee-jerk response to opinion polls.
He says although publicly appealing, this policy raises many difficult questions.
“Currently the Government’s view is that nobody owns water. This policy takes the view that everybody owns the water.
“This shift in ownership status would raise questions of the rights of Maoridom who could legitimately claim a share of ownership under the Treaty of Waitangi.”
John Pfahlert says there are also questions around the mechanisms that would be used to impose a charge on water consent holders and irrigators.
“It would probably mean there would need to be retrospective legislation and this would raise many fish hooks for farmers and for the government.”
Massey University agribusiness expert Dr Jame Lockhart says the policy is the wrong solution to the wrong problem:
Dr Lockhart says the policy has been borne out of unsustainable growth by the dairy industry and foreign-owned bottling plants exporting water at no cost and creating little, if any, benefit to New Zealand.
“There is no doubt that some of our waterways have degraded with the intensification of land use,” he says. “This is due to many things – water extraction for irrigation, reducing flow levels, is only one. But if these are the problems that Labour is trying to solve, then the policy cabinet is full of tried and true methods to rectify them.”
He says the impact on farmers will be immense, especially those in regions where water supply is at risk, including the Heretaunga Plains, Marlborough, Nelson, Canterbury in particular and North and Central Otago.
“If this tax, and it is a tax, is at the levels being mooted, there could be as much as $500-600 billion to be paid by irrigation users, including vegetable growers, vineyards, and orchardists. Agriculture and horticulture is being asked to bear the entire burden for the nation’s water use and the degradation of its waterways.” . . .
The policy also raises questions over property rights and Treaty claims.
“Due to the abundance of water in New Zealand, we have not assigned value to it in the way we should. That means New Zealand has built an agricultural and horticultural sector around water being free, while the volumes used are regulated to some extent, all the costs to date are around access and application, such as storage, pumping and distribution.
“So, if a business has its own harvesting and storage, does it pay the same royalty as a business that takes artesian groundwater or surface water? At that point some fundamental property rights are being removed from those who have invested in their own systems.”
He says the thorny issue of who owns water in New Zealand has, until now, been something that successive governments have tried to avoid.
“Who owns water in New Zealand? Right now, Labour is saying that if they become government they do. At that point, water ownership becomes highly contestable and immediately opens the door for another round of Treaty claims.”
There are also anomalies in the policy, Dr Lockhart says, including during periods of drought.
“Labour appears to be offering some leniency during drought events so when water has the most value to the agricultural and horticultural sectors, and the environmental consequences are greatest, the tax will be either lowered or removed completely. That shows it is not an environmental issue they are trying to solve at all.
“Labour is boldly going where no government has gone before – but this is looking largely punitive as opposed to being a deliberate effort to restore the quality of our waterways.
“The policy simply has not been thought through as anything other than a vote gathering exercise. Our tax system should not be built on the principle that someone has to do worse for you to do better.”
This is echoed by the Taxpayers’ Union:
Labour’s Water Tax policy is quickly becoming the laughing stock of public policy circles with parallels being made to its infamous 2014 NZ Power policy – which, ironically, saw the very industry which escapes the Water Tax whacked with an economic gorilla.
Jordan Williams, Executive Director of the Taxpayers’ Union says, “Three week’s ago, if Andrew Little got up and announced a new water tax, but couldn’t answer how much it is, he’d have been laughed off the stage”.
“How can Labour credibly protest against industry claims that cabbages will cost $18 and grocery bills will sky-rocket when they can’t put a single number next to their policy?”
“As much as NZ Power was laughed at, at least David Cunliffe had some numbers.”
Minister for Primary Industries said the policy is like sending farmers a blank invoice.
Labour has little understanding of farming and very few MPs outside Auckland and Wellington.
Perhaps that’s why they haven’t joined the dots between the profitability of farming and those who service and supply the industry, nor between the costs of food production and the cost of food.